In the 1990s, a prominent class-action lawyer, Dickie Scruggs, had a revolutionary idea. Class-action lawsuits were complicated and expensive. Instead, Scruggs proposed the attorney general of Mississippi sue tobacco companies and hire Scruggs as the state’s private attorney on a contingency fee arrangement. The AG agreed and suddenly Scruggs was counsel in one of the biggest “mass-tort” lawsuits in history, effectively representing all 2.7 million residents of Mississippi. Scruggs and other lawyers earned about $14 billion dollars in just the tobacco litigation.

Dickie Scruggs’s idea spawned a huge new mass-tort industry, mating the interests of activist AGs and contingency-fee lawyers. In fact, the practice has become so lucrative hedge funds provide financing for these lawsuits. A Husch-Blackwell report found by 2011 36 state AGs used contingency fees with outside counsel in mass-tort cases. District Attorneys in many cities, towns, special districts and counties have also since jumped on the bandwagon, resulting in a flurry of mass-tort lawsuits.

AGs hiring lawyers on contingency fees has spawned a national crisis and is bad public policy. Because contingency fees make litigation essentially free for the plaintiff, they have distorted decision making by AGs and DAs. With “free” legal fees, these individuals can make decisions based on personal or political criteria rather than the worth of the case for the public.

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In 2018, for example, several Colorado municipalities sued energy producers for drilling oil and selling gasoline because, they claim, these companies caused some undefined portion of global warming. It is just one of at least 32 other mass-tort, global-warming lawsuits that have been brought by cities, counties and states seeking to advance activist political agendas and win huge damages to boot.

These cases would effectively allow the courts to set climate policy, which the Supreme Court has said is not a proper function of the judiciary. They are also counter-productively working against the policy goals its plaintiffs claim to espouse trying to bankrupt some of the very companies making the largest investments to advance greener energy solutions.

Many AGs and local governments have also partnered with trial attorneys working on a contingency to bring more than 1,000 lawsuits against pharmaceutical companies for manufacturing and selling painkillers. Though the settlement of this effort yielded much-needed resources to fight the opioid crisis, the greed of trial attorneys working the case almost sank the entire deal.

Early in 2022, “a coalition of eleven state attorneys general” accused local governments “and their private lawyers of engaging in fee-driven litigation that has interfered with the states’ ability to negotiate global opioid settlements,” calling it “a money grab.” Fortunately, they were able to resolve these differences and every other state in the country, except Oklahoma and Washington, joined the settlement.

Oklahoma followed the misguided advice of its trial attorneys, went to trial, and lost at the state Supreme Court.

Making laws to regulate tobacco, global warming and drug manufacturing is the job of Congress and state legislatures, not local juries and activist AGs in Boulder, Washington and elsewhere.

Several states have tried to place some limitations on AGs agreeing to contingency fees. But the only real solution to this problem is to adopt the Institute of Legal Reform’s recommendation for AG best practices: “An AG should not enter into a contract with an attorney to pursue litigation on behalf of the state where compensation is contingent on the result of the case or the amount of the state’s recovery…”

This reform will not be easy. It will be resisted mightily by many powerful, activist AGs and by wealthy and aggressive plaintiffs’ attorneys, who enjoy the money and power associated with being a “fourth branch of government.” But without this reform, “society is presented with an ominous mixture of public power and private motivation, effectively leaving us with the worst of all possible worlds.”

Frank Francone is an attorney licensed to practice before the U.S. Supreme Court and a policy fellow in law and politics at the Centennial Institute.